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11-10540r RESOLUTION NO. 10540 RESOLUTION CALLING A PUBLIC HEARING REGARDING A MULTIFAMILY HOUSING DEVELOPMENT AND THE ISSUANCE OF REVENUE BONDS TO FINANCE THE COSTS THEREOF UNDER MINNESOTA STATUTES, CHAPTER 462C, AS AMENDED; GRANTING PRELIMINARY APPROVAL THERETO; AND TAKING CERTAIN OTHER ACTIONS WITH RESPECT THERETO BE IT RESOLVED by the City Council of the City of Richfield, Minnesota (the "City"), as follows: Section 1. Recitals. 1.01. The City is a home rule city duly organized and existing under its Charter and the Constitution and laws of the State of Minnesota. 1.02. Pursuant to Minnesota Statutes, Chapter 462C, as amended (the "Act"), the City is authorized to carry out the public purposes described in the Act by providing for the issuance of revenue bonds to provide funds to finance multifamily housing developments located within the City. 1.03. As a condition to the issuance of such revenue bonds, the City must adopt a housing program providing the information required by Section 462C.03, subdivision 1 a, of the Act (the "Housing Program"). The City Council of the City must also grant preliminary approval to the issuance of revenue bonds to finance the multifamily housing development referred to in the Housing Program, and authorize the submission of an application to the office of Minnesota Management & Budget for an allocation of bonding authority with respect to the Bonds (as hereinafter defined) to finance the Project (as hereinafter defined). 1.04. Woodlake Richfield Apartments, LLC, a Minnesota limited liability company (the "Company"), has proposed that the City, pursuant to the Act, issue its revenue bonds in the approximate aggregate principal amount of$15,000,000, in one or more series at one time or from time to time (the "Bonds"), the proceeds of which will be loaned by the City to the Company to be applied by the Company to the acquisition, construction, and equipping of a 94-unit multifamily rental housing development located at 6401-6429 Lyndale Avenue South in the City (the "Project"). The Company will apply the proceeds of the loan to the following purposes: (i) the acquisition, construction and equipping of the Project; (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds; (iii) the payment of interest on the Bonds during the construction of the Project; and (iv) the payment of the costs of issuing the Bonds. 1.05. Under Section 147(f) of the Internal Revenue Code of 1986, as amended (the "Code"), prior to the issuance of the Bonds a public hearing must be held by the City Council after one publication of notice in a newspaper circulating generally in the City, at lease fourteen (14) days before the hearing. Under Section 462C.04, subdivision 2, of the Act, a public hearing must be held on the housing program after one publication of notice in a newspaper circulating generally in the City, at least fifteen (15) days before the hearing. 1.06. Under Section 146 of the Code, the Bonds must receive an allocation of the bonding authority of the State of Minnesota. An application for such an allocation must be made pursuant to the requirements of Minnesota Statutes, Chapter 474A, as amended (the "Allocation Act"). Section 2. Preliminary Findings. Based on representations made by the Company to the City to date, the City Council of the City hereby makes the following preliminary findings, determinations, and declarations: (a) The Project consists of a multifamily housing development designed and intended to be used for rental occupancy. (b) The proceeds of the Bonds will be loaned to the Company and the proceeds of the loan will be applied to the following purposes: (i) the acquisition, construction, and equipping of the Project; (ii) the funding of one or more reserve funds to secure the timely payment of the Bonds; (iii) the payment of interest on the Bonds during the construction of the Project; and (iv) the payment of the costs of issuing the Bonds. The City will enter into a loan agreement (or other revenue agreement) with the Company requiring loan repayments from the Company in amounts sufficient to repay the loan when due and requiring the Company to pay all costs of maintaining and insuring the Project, including taxes thereon. (c) In preliminarily authorizing the issuance of the Bonds and the financing of the acquisition, construction, and equipping of the Project and related costs, the City's purpose is to further the policies of the Act. (d) The Bonds will be limited obligations of the City payable solely from the revenues pledged to the payment thereof, and will not be a general or moral obligation of the City and will not be secured by or payable from revenues derived from any exercise of the taxing powers of the City. Section 4. Public Hearing. The City shall meet at 7:00 P.M. on Tuesday, September 13, 2011, to conduct a public hearing on the Housing Program, the Project, and the issuance of revenue obligations by the City, notice of which hearing (the "Public Notice") will be published as required by Section 462C.04, subdivision 2, of the Act, and Section 147(f) of the Code. The City Manager of the City is hereby authorized and directed to publish the Public Notice, in substantially the form attached hereto as Exhibit A to this resolution, in the Sun-Current, a newspaper of general circulation in the City, at least fifteen (15) days before the meeting of the City Council at which the public hearing will take place. At the public hearing reasonable opportunity will be provided for interested individuals to express their views, both orally and in writing, on the Project, the Housing Program, and the proposed issuance of such revenue obligations. Section 5. Housing Program. Bond counsel, as described below, shall prepare and submit to the City a draft Housing Program to authorize the issuance by the City of up to $15,000,000 in revenue bonds to finance the acquisition, construction, and equipping of the Project by the Company. The City is authorized and directed to submit the Housing Program to Metropolitan Council for review and comment pursuant to Section 462C.04, subdivision 2 of the Act. Section 6. Preliminary Approval. The City Council hereby provides preliminary approval to the issuance of the Bonds in the approximate aggregate principal amount of $15,000,000 to finance all or a portion of the costs of the Project pursuant to the Housing Program of the City, subject to: (i) a public hearing as required by the Act and Section 147(f) of the Code; (ii) final approval following the preparation of bond documents; and (iii) final determination by the City Council that the financing of the Project and the issuance of the Bonds are in the best interests of the City. Section 7. Submission of an Application for an Allocation of Bonding Authority. Under Section 146 of the Code, the Bonds must receive an allocation of the bonding authority of the State of Minnesota. An application for such an allocation must be made pursuant to the requirements of the Allocation Act. The City Council hereby authorizes the submission of an application for allocation of bonding authority pursuant to Section 146 of the Code and the Allocation Act in accordance with the requirements of the Allocation Act. The Mayor of the City, the City Manager, the Finance Manager of the City, and Kennedy & Graven, Chartered, acting as bond counsel with respect to the Project and the Bonds, shall take all actions, in cooperation with the Company, as are necessary to submit an application for an allocation of bonding authority to the office of Minnesota Management & Budget. Section 8. Reimbursement of Costs under the Code. 8.01. The United States Department of the Treasury has promulgated regulations governing the use of the proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City or the Company for project expenditures paid prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse an original expenditure not later than sixty (60) days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds occur within eighteen (18) months after the later of: (i) the date the expenditure is paid; or (ii) the date the project is placed in service or abandoned, but in no event more than three (3) years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the Bonds. 8.02. To the extent any portion of the proceeds of the Bonds will be applied to expenditures with respect to the Project, the City reasonably expects to reimburse the Company for the expenditures made for costs of the Project from the proceeds of the Bonds after the date of payment of all or a portion of such expenditures. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the Bonds, or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations and also qualifying expenditures under the Act. Based on representations by the Company, other than (i) expenditures to be paid or reimbursed from sources other than the Bonds, (ii) expenditures permitted to be reimbursed under prior regulations pursuant to the transitional provision contained in Section 1.150-2(j)(2)(i)(B) of the Regulations, (iii) expenditures constituting preliminary expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv) expenditures in a "de minimus" amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures with respect to the Project to be reimbursed with the proceeds of the Bonds have been made by the Company more than sixty (60) days before the date of adoption of this resolution of the City. 8.03. Based on representations by the Company, as of the date hereof, there are no funds of the Company reserved, allocated on a long term-basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent financing for the expenditures related to the Project to be financed from proceeds of the Bonds, other than pursuant to the issuance of the Bonds. This resolution, therefore, is determined to be consistent with the budgetary and financial circumstances of the Company as they exist or are reasonably foreseeable on the date hereof. Section 9. Costs. The Company will pay the administrative fees of the City and pay, or, upon demand, reimburse the City for payment of, any and all costs incurred by the City in connection with the Project and the issuance of the Bonds, whether or not the Bonds are issued. Section 10. Commitment Conditional. The adoption of this resolution does not constitute a guarantee or a firm commitment that the City will issue the Bonds as requested by the Company. If, as a result of information made available to or obtained by the City during its review of the Project, it appears that the Project or the issuance of Bonds to finance the costs thereof is not in the public interest or is inconsistent with the purposes of the Act, the City reserves the right to decline to give final approval to the issuance of the Bonds. The City also retains the right, in its sole discretion, to withdraw from participation and accordingly not issue the Bonds should the City Council, at any time prior to the issuance thereof, determine that it is in the best interests of the City not to issue the Bonds or should the parties to the transaction be unable to reach agreement as to the terms and conditions of any of the documents for the transaction. Section 11. Effective Date. This Resolution shall be in full force and effect from and after its passage. Adopted by the City Council of the City of Richfield, Minnesota, on this 9th day of August, 2011. 104411( Debbie Goettel, â–ºayor Attest: Nancy Gibb 4 ity Clerk